NOT so long ago, luxury was a straightforward proposition. The symbols were clear cut, the goods very expensive, the clients uncommonly wealthy. And as I saw on a work trip in the 1990s, it was obvious what counted as the very high end.
On one official state visit to Japan at the time, the list of business delegates tagging along with the Prime Minister on the trip included one name that was not usually in the entourage.
Ong Beng Seng, or OBS as he is referred to, is a familiar figure in business circles. The billionaire entrepreneur, whose empire includes hotels, entertainment, car distributorship and fashion, is not one of your usual suspects who would accompany an official delegation. (Indeed, the Japan visit was the only official trip he's known to have gone on.)
Described as a "glitzy figure", "media shy" and "notoriously secretive". OBS keeps a low profile (although he is known to be well acquainted with many Hollywood celebrities.)
So when the Singapore delegation took off on the overnight SQ flight to Tokyo, OBS was nowhere in sight. This was not so surprising. Perhaps he had dropped out of the trip at the last minute. But there he was the next morning, at the official welcome ceremony. Obviously OBS had taken another flight. Yes, we were told, he arrived on his own private jet.
And while the rest of us were struggling with our luggage, our man was carrying only a light overnight bag - a battered one with the LV monogram.
A private jet and a Louis Vuitton bag - real cool, I thought. That was the first time I had met someone in person who travelled on his own plane, and it was also the first time I had set eyes on a Louis Vuitton bag in the flesh (and a worn out one at that). But I instantly registered that these represented true luxury.
Fast forward to today - and what a big difference nearly three decades have made! While they were rare then, private jets are now commonplace; many billionaires own at least one. Along with yachts, private jets have grown into a US$26 billion thriving business in 2017, according to management consultant firm Bain & Company.
Louis Vuitton bags are also flying off store shelves. The sight of them on the arms of women is a common sight not only on Orchard Road, but also in HDB heartlands.
Obviously, many luxury goods are no longer the preserve of only the rich and famous. Others can now also afford many of these products.
Have luxury goods - and services - lost their status-symbol appeal or "cool" cachet?
Many women indeed are said to have turned to the even pricier Chanel bags as a more exclusive alternative to LV bags. And for a time, the queue at the Louis Vuitton boutique at the Ngee Ann City mall shifted to the Chanel outlet next door.
Storied brands like Pierre Cardin and Charles Jourdan that once invoked glamour have foundered, after they spread their names too thinly on a plethora of products, went downmarket and compromised on quality and exclusivity.
Plagued with widespread counterfeiting and shifting tastes, Louis Vuitton could have suffered the same fate, but didn't.
The fashion flagship business of Paris-based LVMH (Louis Vuitton Moet Hennessy), the world's biggest luxury group, reported record sales in 2018 of 46.8 billion euros (S$71.8 billion), up 10 per cent from the year before, with profits from recurring operations of 10 billion euros last year, up 21 per cent. In the fourth quarter, LVMH's fashion and leather-goods division outperformed the rest of the group with sales growing 17 per cent.
The queue is also back at the Louis Vuitton stores in the ION and Ngee Ann City malls.
Similarly, the Kering group, which owns brands Gucci, Yves Saint Laurent and Balenciaga, reported a strong year as the China market remained robust after fears of a sustained slowdown. Fourth-quarter sales at Gucci rose 28 per cent to 2.3 billion euros, Paris-based Kering said on Tuesday, in line with expectations.
Overall, the global luxury industry continued to shine in 2018 after bouncing back from a slowdown in 2016, says Bain & Company. Sales in the global luxury market - which includes watches and jewellery, fashion and leather wear, super car and private jets, luxury hotels and cruises as well as fine wines and fine art - jumped last year by an estimated 5.0 per cent to 1.2 trillion euros.
Designer key chains and yoga mats: it's a numbers game
Thanks to rising affluence and the internet, there are evidently still new markets out there for the luxury industry to conquer, without pissing off traditional and status-conscious clients, who are still the main source of the industry's revenues.
Yet hitting the right balance between protecting the well-established clients and finding new customers - those who are less wealthy (or not yet rich) and possess different values - would have taken a lot out of the luxury players.
Luxury has gone democratic, a movement which poses immense challenges to purveyors of the rare and/or expensive. While the process has given a point of entry for brands - newer, younger ones especially - to reach the next generation of customers, the democratisation is also seen to have given more people access to luxury and cheapened its image. How long and how far can this go?
Pritish Bhattacharya, a researcher who studied the luxury industry at ISEAS - Yusof Ishak Institute, says luxury in general can't be characterised as accessible. But a small and growing segment of luxury goods is certainly becoming more affordable. Rising revenues and the rapid expansion in the range of products available at relatively lower price points suggest that this is contributing to a steady broadening of the luxury market.
The shift down the market is dictated by changing economic conditions and the need to sustain the luxury business, according to Mr Pritish.
"Had luxury giants been able to continuously generate skyrocketing profits without having to cater to an emerging middle class, we should not have seen any small ticket items on their store shelves," he says.
Consequently, the researcher says, exclusivity is no longer the only watch-word for upmarket brands. "Why else would so many traditionally guarded luxury companies start selling keychains, yoga mats, fridge magnets and even candles?"
Mr Pritish doesn't think that accessible and affordable luxury is a "standard cause" of brand dilution. On the contrary, it provides a means to expand market base and offers consumers more choices in shopping.
One example is Leica. While keeping prices of its cameras up - the average price of a Leica camera body alone is 2.5 times the average pay of a Germany worker, according to Leica chairman Andreas Kaufmann - the high-end German brand has tied up with larger scale manufacturers to offer more affordable products to a bigger market.
Leica lenses are thus used in Lumix digital cameras made by Panasonic in Japan. Leica lenses are also installed in mobile phones made in China by Huawei, the Chinese giant that has now overtaken Apple in smartphone rankings.
What makes you want it?
But the "State of Luxury 2018" report, based on a poll of 600 industry insiders, warns that "the democratisation trend is disrupting the traditional relationships that luxury brands have developed over the years with their primary customers: the sophisticated wealthy".
Written by Luxury Daily publisher Napean LLC and marketing firm Unity Marketing, the report says even some leading brands have undermined their significance and impact by expanding their product lines with multiple entry points. "They are chasing after a broader base of clientele as opposed to differentiating themselves from their imitators."
The inclination to enlarge the customer base has sprouted marketing terms - sometimes contradictory - like "affordable luxury", "entry-level models" and "the industrialisation of luxury products". It has also led to a proliferation in the definition of "luxury", and the pressure is now on to define and differentiate true luxury from the poseurs.
In fact, the "State of Luxury 2018" report says that the shifting definition of "luxury", especially in the minds and lifestyles of customers, is perhaps the most important trend shaping the future of the industry. This shift calls on those in the business to adjust their definition of luxury as well.
According to Mr Pritish, there has never been a set definition of luxury goods in economic theory, except that they can be more easily categorised as "wants than needs".
A century ago, it was thought that luxury goods were bought to make others envious, he says. "During the 1950s, scholars pointed out that luxury was consumed to stand out from the masses. Even later, researchers started looking at the aspirational value of luxury and then the compatibility between a consumer's personality and his luxury possession - and so on."
With time and change in income structures, Mr Pritish says luxury brands are starting to realise there is no single factor at play here. Hence the recent move to include a wide range of products and prices under the luxury umbrella.
To Su Jia Xian, a luxury watch blogger, a luxury good or service is "something that sees a demand increase disproportionately along with income".
"There are luxury versions of every conceivable good, 'hard' goods like watches and cars, but even food and experience like tours."
He says this definition is "definite and unchanging, but the products or services that include luxury segments have grown".
"Now you have high-end dry-cleaning, artisanal ice cream and so on. And it's all driven by greater wealth in the world, but more importantly greater awareness of how to spend money, which is mostly due to social media."
In Aurel Bacs' book, true luxury falls on the opposite end of accessibility and affordability.
The auctioneer, who sold a Rolex watch once owned by the actor Paul Newman for an astounding US$17.75 million, a record for a stainless steel timepiece, has a philosophical take on the concept.
"Fundamentally, it's not about materials but things money can't buy," he says. "Ultimately, it's about health and time. At the next level, it's about what you do with your time, your experience, emotion."
Mr Bacs says luxury speaks of something that's very rare, unique, unexpected, emotive and bespoke. An incredible meal isn't just something cooked up by a top Michelin star chef; the real luxury is to enjoy it in some extraordinary setting.
Mr Bacs says the luxury experience of owning the US$17.7 million for the Paul Newman-Rolex timepiece isn't complete without the special delivery to the owner - to have it sent to him at the time and place he wanted.
What makes you fulfilled?
Mr Bac's definition is closer to what the next generation of customers, the millennials, seek in luxury - minus the ultra-high costs. These younger consumers are a different breed from their parents, who spent on luxury goods and services mostly to impress others. Millennials are more concerned about self-fulfillment and saving the earth.
And this next generation of luxury customers, who will be the biggest contributor to the industry's growth, is already re-shaping the luxury market, according to Nicolas Baretzki, chief executive of Montblanc, the German purveyor of upscale pens, watches, jewellery and leather products.
"I see a shift in the luxury mindset," he says. "In the past status used to be purely physical. It's about products, whether jewellery, a luxury car or a handbag. Now it is intangible and often focused on experience. It's not about what we have, but who we are."
Mr Baretzki says millennials want to be more connected, more creative, more ethical and more in-the-know than anyone. "Therefore we have to offer more than a product," he says. "It has to bepart of this connected lifestyle and it has to be purposeful."
Euromonitor predicts that global spending on all experiences, including the likes of luxury spas and travel, is set to rise to US$8 trillion by 2030. While luxury cars boast much higher sales (US$123 billion in 2017), fine wines and champagne (7 per cent) is outpacing all other categories (5 per cent) in terms of growth in 2017, the marketing research firm says.
The transition to an experience economy is undeniable - and producers of luxury goods like Ferrari are scrambling to reinvent themselves to fit into this new world.
"We can combine the two (product and experience)," says Dieter Knechtel, chief executive of Ferrari Far East Hub. "We have the product which is highly reputable, scarce and exclusive. We can personalise it for many of our customers. At the same time, we provide enjoyment of the car for like-minded people. We provide people with the emotions or specific experience only we can provide."
Besides Ferrari-designed clothes, shoes and other items, there's also a Ferrari Driver Academy which trains Ferrari car owners to achieve peak performance and maximise the enjoyment of driving the car. Clients get to participate or have access to Ferrari car races as well.
There's also the Ferrari Museum where Ferrari owners can live the Prancing Horse experience first hand, the Ferrari-branded theme park in Abu Dhabi, and another similar carnival park Ferrari Land in Barcelona.
The Italian marque makes only about 9,000 cars yearly for the global market - and every car made is pre-sold. "We produce cars strictly to order," says Mr Knechtel.
"Our ultimate goal is not to sell as many cars as we can, but value protection and to make it worthwhile for our customers (to own a Ferrari car) over time," he says. "We invest a lot in development so that the only way our prices go is up. But price is not a big concern for us because wealth is increasing everywhere."
Ferrari offers different levels of customisation of its cars for clients - and for the "best" customers, according to Mr Knechtel, "we can build a car based on their dreams".
Marketing to millennials
Apart from the challenge of not alienating a brand's time-honoured customers, luxury players are also now dealing with an audience that not only has different values, it also communicates - and transacts - through a different medium.
"The biggest change (in the luxury watch business) is the internet, which also changed how people learn about watches and how they buy them," says watch blogger Mr Su. "In that respect, the evolution is still going on and no one knows how the cards will fall."
Many luxury brands, including Louis Vuitton and Prada, are already selling online. Globally, the luxury industry spent over US$1 billion on digital ads in 2016, a 63 per cent jump over 2013, while spending on magazines dipped 8.0 per cent over the same period, according to the "State of Luxury 2018" report.
Bain & Co estimates that luxury online sales rose 24 per cent in 2017, capturing an overall market share of 9 per cent. It projects that by 2025, online sales of personal luxury goods will make up 25 per cent of the total market.
But it's not the end for physical stores. Industry insiders says they are still where customers connect with the brand through private shopping sessions, personalised styling and white-glove customer service. Critical success will come with the integration of the new-age digital strategies with established luxury branding, according to them.